If you’re the owner of one of the 33.2 million small businesses in the United States, having business insurance is often essential. However, ensuring you get the best policy based on your operational and professional needs isn’t always easy. There are many types of business insurance, and each one offers different kinds of coverage.
By learning about the common types of business insurance, it’s easier to determine which policies are best for your company. Here’s an overview.
Professional Liability
With professional liability insurance, the policy provides financial protection against claims of negligence that cause harm to a third party, such as a client or customer. Precisely what’s included in the policy can vary, as every industry and profession has unique risks. For example, some may feature coverage for bodily harm caused to another, while others may concentrate on property damage. However, what the policy aims to protect against is harm to another caused by a mistake, error, or omission on the part of the covered business.
Property
Commercial property insurance covers physical items, such as equipment, materials, inventory, furnishings, and signage. It operates similarly to renter’s insurance, providing compensation if business-related property is damaged in a qualifying incident, such as a fire. Typically, it also offers protection against theft and vandalism.
Essentially, the plan ensures that companies can replace damaged, stolen, or destroyed items without having to pay solely out of pocket. Some policies also offer compensation for losses in revenue relating to the covered equipment.
Commercial Auto
Commercial auto insurance works similarly to car insurance for primary vehicles; it simply accounts for the heightened risk that typically comes with using a car, truck, SUV, or van for business purposes. Along with providing a financial safety net for incidents that result in damage to the vehicle, it can include liability coverage for harm caused to others or property owned by third parties.
In most cases, commercial auto insurance covers situations that personal vehicle insurance won’t, as operating a car for business purposes usually isn’t covered in personal vehicle insurance policies. With commercial auto insurance, you also have the option of extending the coverage to include any employee that drives a company-owned vehicle.
Workers Compensation
Workers’ compensation insurance is less focused on the company itself than it is on the employees of the business. Essentially, it ensures that workers who experience an on-the-job injury or work-related illness are appropriately compensated, preventing them from shouldering the burden of related medical costs or lost wages.
In 2020, the total cost of every workers’ compensation claim for an injury came out to approximately $163.9 billion, including medical expenses, lost wages, lost productivity, and many other related costs. The cost for a single medically consulted injury averaged out to $44,000, which is a substantial figure, particularly for small businesses.
In most states, workers’ compensation insurance is required by law. Premium costs vary based on a variety of factors, including location, industry, and more. As a result, it’s often best to get quotes to see how much it would run.
